Market Wrap: Bitcoin Slides to Two-Week Low, Ether to Below $2K as China Reiterates Crypto Ban

China’s central bank announced Monday it had recently summoned several banks and payment firms to ramp up their crackdown on cryptocurrency trading, prompting several key market indicators to turn bearish Monday.

Monday’s sell-off was triggered by negative news in China once again. But the market is split on the severity of the renewed crackdown by the Chinese government.

The correction is “mostly driven by China FUD [fear, uncertainty and doubt] again,” Annabelle Huang, partner at Hong Kong-based Amber Group, told CoinDesk. “Hardly news, not that [banks and payment services in China] are really providing services to crypto-related [business] anyway.”

Read More: China Says Banks Must Block Crypto Transactions; Market Falls

Others, however, expressed less positive views.

“The statement of the central bank of China is relatively mild as mentioned before,” Colin Wu, a crypto journalist based in China tweeted. “But does this mean that the Chinese government’s crackdown is over? We are not sure. Just as no one had predicted that China’s crackdown on bitcoin mining would be so severe.”

Notably, prices for the tether and Chinese yuan pair on the over-the-counter (OTC) desks on Huobi and Binance, two of the most popular crypto exchanges among Chinese investors, have plummeted in the past 24 hours as well, according to data from Price Dancing.

The drop reflects a reduced demand for tether, a preferred stablecoin by many traders in China, on the OTC desks, as traders and investors in China are possibly selling their crypto holdings and turning them into cash.

“Since [China] shut down Sichuan mining operations, some miners had to liquidate their crypto holdings,” Huang said. “Mining ban is going to have a somewhat ongoing effect.”

Read More: Sichuan Becomes Latest Chinese Province to Order Bitcoin Miner Shutdown

Monday’s price slide has prompted institutional investors to exit bitcoin futures on the Chicago Mercantile Exchange (CME), resulting in an unusual condition known as “backwardation,” which is when futures trade at a discount to the spot price.

JPMorgan, in a recent report, said that such a move on the bitcoin futures market should be seen as a sign of weak demand for bitcoin from institutional investors, who are the primary users on the CME, as CoinDesk reported on June 10.

On June 19, the mean of bitcoin’s daily inflow to spot exchanges reached its highest level since the market crash in March 2020, according to blockchain data firm CryptoQuant, meaning that more BTC are available to be sold on exchanges.

Ki Young Ju, the chief executive of CryptoQuant, also noticed that bitcoin “whales” have started to sell their large holdings, intensifying the bearish sentiment.

Ju and his firm use a so-called whale capitulation index to monitor bitcoin whales’ behaviors. The index number has turned positive, which shows that an increased number of bitcoin whales are sending their coins to exchanges, according to Ju.

The number remained positive for an extended period of time during the bear markets of 2018 and 2019.

“I hate to say this, but it seems like the $BTC bear market [is] confirmed,” Ju wrote on his website.

The alternative cryptocurrency (altcoin) market was hit harder on Monday, with dogecoin among the most significant losers of the day.

At press time, the meme-centered crypto is changing hands at $xx, down XX% in the past 24 hours, according to CoinDesk 20.

Ether, the No. 2 cryptocurrency by market capitalization, also faced a severe daily loss when its price dipped below $2,000, the first time since May 23.

“Notably, most major altcoins suffered relatively higher losses in the last 24 hours when compared with bitcoin, and we may, very soon, see a switch from alts to bitcoin in terms of capital flows,” Hunain Naseer, senior editor at OKEx Insights, told CoinDesk.

Digital assets on the CoinDesk 20 are all lower Monday. Notable losers as of 21:00 UTC (4:00 p.m. ET):